Thomas Piketty: Western countries have to be modest

Thomas Piketty: Western countries have to be modest

This year the Harvard University Press published your latest book, the Brief History of Equality. Could you define, please, what do you, in your work mean as equality?

This is a very broad notion, including political equality, social economic equality. To make it clear, let me say that this book is much shorter than my previous books, which were 1,000 pages long. This one is only 250 pages long. I have tried to focus on what I see in the end as the most important lesson from my research and the history of equality and inequality.

The most important conclusion is the idea that in the long run, we do have a movement towards more equality. It’s not been there forever, it’s not since Neolithic times. It’s grounded in history. It started, say, at the end of the 18th century with the French Revolution, the US Revolution to some extent.

This starts with the abolition of the privileges of the aristocracy, which marks at the beginning of the end of state-based inequality and equality of rights. This also starts with the Slave Revolt in Saint-Domingue in 1791, which is the beginning of the end of slave societies, colonial societies. What you can see with these two examples is that this is a very broad notion of equality. It includes basic rights, political rights, together with economic and social rights.

What you can see also is that this is a process that has been going on over the following two centuries. In the 19th century, you have the final abolition of slavery, you have the rise of the labor movement, the rise of universal suffrage, first for men in the 19th century and for women in the 20th century, decolonisation in the 20th century, rise of labor movement, social security, progressive taxation, decolonisation, civil rights in the US, end of apartheid in the late 20th century.

Billionaire can influence elections, can influence media, have more political voice, more political influence

This is a process which continues today with the Me Too movement, the Black Lives Matter movement. We live in more equal societies, of course, than at the end of the 18th century, but we still live in societies where the power of money is very important. For instance, in our democracy, we don’t have aristocratic privileges anymore, but there are other privileges.

Billionaire can influence elections, can influence media, have more political voice, more political influence in a way that it’s different from the property-based democracy of the 19th century, but it’s still very imperfect. I think when people, 50 years from now or 100 years from now, will look at our democratic system today, maybe they will say, “Well, it’s democracy, but it’s intermediate between 19th century democracy and more real democracy which hopefully will be in place in 15 years or 100 years.”

This is the same for international inequality. We’ve made progress as compared to the time of slavery and colonialism, but we still have enormous inequality between the North and the South. We still have enormous racial discrimination within country. This is the long run movement towards more equality that I’m talking about. This is a very broad, multi-dimensional notion of equality. And this is an ever going process that is primary based on political transformation, political mobilisation, social struggles, and this is going to continue.

You’ve mentioned the two historical breakup processes, both revolutions: the French and the Russian, and you’ve meant Black Lives Matters movement, Me Too movement and so on, but how do you consider nowadays crucial events? We mean the COVID crisis or the corona virus crisis, on the one hand and Russian-Ukraine war on the other hand. What can be the expected impact on the equality or inequality worldwide or at least in the European continent?

These two events, the COVID and the Ukraine war, unfortunately, they are not emancipation movement to begin with. They are catastrophe of the different nature, of course. But to begin with, the COVID is just a pure catastrophe. Of course we can learn from catastrophe to improve our health system, et cetera, but to begin with, this is just bad.

I don’t believe in the stories that we need catastrophes to make progress. Catastrophes are not necessary and they are not sufficient because they can also lead to very bad political outcomes, to the rise of nationalism. With Ukraine, it’s a different and much more complex story which has some resemblance with many patterns of nationalism in the past, unfortunately. With the fact that they’re very powerful state capacity, state power, can be used for the better or the worst.

That’s also one of the lessons from my history of equality, is that state power and state centralisation is not good or bad in itself. It depends who controls the state and for what political project. In my book, I tell the story of Sweden, which we view today as a very egalitarian country with the state capacity that is used to have a progressive taxation of income and wealth to pay for a good welfare state system, but for a long time, the state capacity of Sweden was used, well, not to invade Ukraine but was used to protect extreme inequality with a system of voting rights until 1910, when rich men would have between 1 and 100 votes depending on how wealthy they are.

some regions in the east of Ukraine don’t necessarily feel that market integration with Western Europe is going to benefit them

Even in municipal elections, there was no upper limit. You had several dozen Swedish municipalities where only one individual had a majority of the vote. This was Sweden in the 1910. Even multinationals today wouldn’t dare asking for such a system. They would love to have a system like this in the countries in the Global South or Global North where they operate, but they don’t even dare asking for this kind of voting rights.

Sometimes they find other ways to get the same outcome, but the very fact that they don’t even dare asking for that is interesting. Now this was Sweden until 1910. Then you had big trade union mobilisation, Social Democratic Party victory in 1932 which put the state capacity of Sweden and its administration and it’s register to measure income and wealth to the service of a completely different project, where you would register income and wealth not to distribute more political power, but to make these people pay for the system of health care and education that is not perfect. We still read the limitation of our health care system, but still, it was much better than everything else that had been done at that time.

I’m saying this because today the way the Russian state is using state capacity is of course the worst example you can think. Viewed from Western Europe, we think of the wars between France and Germany, World War I, World War II, about the frontier between France and Germany which caused two world wars and three big wars between France and Germany in 1870 and World War II, except that here, of course, Russia is three times more populated than Ukraine.

It’s just brute force trying to find a future for completely irrational and insane view of the world. This is very sad. At the same time, I think the way the Soviet Union ended was too simple. Nothing really bloody dramatic happened, except in Yugoslavia of course, but for the rest of the ex-Soviet Union was preserved from extreme forms of violence and civil war in spite of the dismantling of a large political community, which despite all its shortcomings had also, at some point, some kind of universalist ideal at least in theory and managed, as compared to the service regime before 1970 managed to achieve a number of successes in terms of mass education and mass industrialization. Very quickly ended up through Italian nightmares which we all know about.

Today, the Russian state is at least as it is added, as an imagination about the future of Russia, which is tragically realistic and self-defeating and very dangerous. This is part of the complex history of state building, state capacity which can, again, centralise the power, can achieve the best and the worst, but this is not going to end up here. I think what also we need to remember in rich Western countries is that at a general level, this is also part of what you get when you believe that generalised market competition between countries, between people, between territories is sufficient in itself to deliver universal social harmony.

It doesn’t work like that within Ukraine and within Russia, some territories, some regions in the east of Ukraine, which don’t necessarily feel that market integration with Western Europe is going to benefit them, is going to help them to find the proper situation. Right now, the priority is certainly to help Ukraine to fight the war, but we also need to think about the more balanced economic system and a more balanced international order so that every country, every region, including regions within Ukraine, within Russia.

You suggest democratic socialism as an arrangement that leads to greater equality. According to you, how can the democratic socialism be achieved? What way? Is it possible or not?

Yes. Not only this is possible, but we have already made very substantial progress in this direction the past two centuries, and in particular, over the course of the 20th century. Despite all the catastrophes and despite all everything bad that happened, there’s been a lot of movement towards more equality. What I put under the label of democratic socialism and participatory socialism is very much in the continuation of some of the transformations that have happened between, say… If you compare the capitalism of today with the capitalism of 1910 or 1913, this really has nothing to do.

Today, we live in a world where we have the most developed countries of Europe, you have a welfare state which is 55% of national income. We have much more equality of income and also of wealth, although it has been more limited, the movement of wealth equality, as compared to 100 years ago. There has been this achievement at progressive taxation.

The legal system defining the right of property owners have nothing to do today. In 1910, you could fire a worker, reduce the wage, or fire a tenant as you want. Today, it’s not perfect, of course, but the notion of what power you have as a owner have been completely rectified. I would say, for participatory socialism, democratic socialism that I have in mind, of course, it’s very different from the system as compared to the system we have today, but I would say it’s not more different to the system we have today than the system we have today is different from the very authoritarian, unequal, patriarchal, colonial capitalism that we had in 1910.

If you look at the transformation between 1910 and 2020, what I put under the label of participatory socialism, if it happens by 2050 or 2080, it will be in the continuation of this movement. It will include much more workers rights, it will include at least 50% of voting rights in the board of all companies, small or large, for workers representative, just as workers, as investors in labor, independently from any shares in the capital in the company.

In addition, within the 50% of voting rights going to shareholders, there will be a maximum share of voting rights that a single shareholder could have in a large company, say no more than 5% or 10% of voting rights for a single shareholder in a company with 100 workers or more, but you can define different formula. In addition, there will be permanent redistribution of wealth with the minimum inheritance for all that will come in addition to basic income, free education and health care, and very extensive welfare state finance through progressive taxation of income, wealth, and carbon emissions.

Again, this is fairly ambitious, but I think you don’t need this to be adopted in every country at the same time. I think this can happen gradually. Each individual country and region of the world can move in this direction at its own pace. All countries, we don’t need a world government, all countries doing everything at the same speed.

What’s important for this to be possible is that, of course, you cannot at the same time move in this direction of participatory and democratic socialism and take free trade and free capital flows as given without any condition. I am not against exchange of goods and services and circulation of capital and labor. Well, I am more for circulation of labor than circulation of capital, but I am not against all this form of circulation, at the condition that each country can put condition to the circulation.

You need fiscal cooperation, you need social cooperation, you need environmental protection. It’s clear that if you continue to have unconditional free trade and free capital flows without any condition, then this cannot work, but nobody forces us to be in such a system. That’s clearly an important precondition.

We have to build a new form of internationalist approach to the global order and international integration where the circulation of goods and services and investment comes not as an objective in itself, but has to come together with explicit objectives in terms of social justice, environmental justice, fiscal justice, educational justice. It cannot come separately as an objective as such.

We have the history with a good knowledge of so-called centralised Soviet-style command economy, the socialism which was Soviet-like. We ask ourselves naturally, why should it be this time different?

Well, the democratic socialism and participatory socialism I have in mind has of course nothing to do with Soviet communism and state socialism like what has been experimenting in Russia, in Eastern Europe or in China today. It has nothing to do because it is a much more decentralised view of political, social, economic organisation. It’s entirely based, of course, on pluralist election and workers powers in companies, economic democracy, workers rights, trade union rights.

It is inspired by the successes of countries like social democratic regime in Sweden or Germany, US progressive taxation under Roosevelt,  in all of these countries. This is trying to push further this social democratic model. Democratic socialism in my approach, or participatory socialism, is really the continuation of social democracy in the 21st century, but much more ambitious, much more demanding, but it is in the continuation.

I will say the social democratic model of today is already very different from capitalist model of 1910. Democratic socialism is the next step, 50 years later or 100 years later. I think it’s important to think about the long run and not just to be thinking about the next election and the next week and the next year, because, of course, what I’m describing is not going to happen next week.

Then you have to define steps and you have to have political strategy to see what’s possible within a given country, within a given time frame, but if you don’t know where you want to go in the long run, you’re not going to go anywhere, even in the short run. I think it’s important to reopen this discussion, to recognise, of course, the gigantic failures of state socialism, Soviet socialism.

lessons about social justice and democracy that Western countries are constantly giving to the rest of the world are sometimes very difficult to hear from the point of view of someone in West Africa or in India or in Brazil

For me, it was very important in my own personal trajectory and intellectual evolution, but at the same time to recognise the successes of social democratic regime in Sweden, the Roosevelt, in Germany, in France, all sorts of countries. In India, there are all sorts of things to learn about antidiscrimination policy in the democratic parliamentary system of India. You will see something in Europe, sometimes people feel they have nothing to learn from this, but I think in fact they have something to learn. Also, there are lots of problem as well.

I think this is also part of the common ideological competition with the system of state socialism in China, which to me is completely opposite extreme to the decentralised participatory socialist models that I am describing, but I think this is the proper response to the Chinese challenge, because if the Western countries, if all that to propose is hyper capitalist selfish system to the world, I think they will actually be in a relatively weak position in the future and in the coming decades in the global ideological competition with China and also with Russia for that matter, because the lessons about social justice and democracy that Western countries are constantly giving to the rest of the world are sometimes very difficult to hear from the point of view of someone in West Africa or in India or in Brazil.

I think Western countries have to be modest. They have to push their social achievements as their main assets, but they have to be modest about their perfect democratic model, et cetera, which, as I said, is still very imperfect. They have to improve it at the same time as they propose a more equitable economic model or tax regime to countries in the South. At the same time, as they confront the legacy of their own, the way they became rich through colonialism, through slavery and through environmental pollution, because, of course, the carbon emissions of countries in the North represent the vast majority of the historical carbon emissions.

The countries in the South, typically India, countries in Sub-Saharan Africa, are going to pay the higher cost for this. If all the Western countries do is to give lessons about democracy and justice to the rest of the world, I think they will not manage to convince anyone. That’s part of the reason why today many of these countries in the south are actually not supporting the West in the Ukraine war with respect to Russia.

Defining another development model and another model of democratic socialism, pursuing the achievement of social democracy in 20th century Europe and to a lesser extent North America, is also very important for this geopolitical reason.

Which country is nearest to democratic socialism?

We always think of Sweden and Nordic Europe, and indeed there is a lot to learn from these countries, but at the same time, I should say there’s a lot to learn from many different countries. Our main enemy is nationalism, intellectual nationalism or nationalism of all sorts, so we have to

They’ve not been very constructive about proposing some cooperation and global cooperation to change the international tax system. They are very much centered on their own nation state, but I think they are not sufficiently internationalist in a way. There’s a strong limitation, also that. We have to be very open and looking at how large federation works. For instance, I think the European Union has to learn by looking at how the Indian Federation is working.

That’s a little country with 1.3 billion people, and they manage to adopt common federal income tax, federal corporate tax. Even the African Union or the West African Economic Union for that matter, has rules about how to prevent tax competition. They cannot have a corporate tax rate below 25% in West Africa in order to limit tax competition, which in the European Union, we are not even able to impose to Ireland and Luxembourg.

I think the issue of democratic federalism and democratic socialism is an issue where we have to learn from different parts of the world and there’s not one single model to follow.

Jana Bobošíková and Hana Lipovská, Make it Clear!, 6/23/2022